In this three part series we will cover the things you need to do when buying a business. ‘Part 1: You’ covers the key points you need to consider as a first priority.
Looking at buying a business? More and more frequently, we hear stories of people leaving their corporate jobs and striking out on their own.
While their entrepreneurial spirit is admirable, sometime people leave a secure job to buy a business with little or no experience in running a business.
To safeguard against the unexpected, we’ve created a preliminary checklist to make buyers aware of the steps they should take and the knowledge they should acquire before forging ahead.
1. Do your research i.e. exercise due diligence in all your dealings
Exercising due diligence is the single most important step someone can take to make a fully informed decision when buying a business.
For first-time buyers, purchasing a business is a significant decision, so you should be examining and re-examining everything that you’re doing to make sure you’re not setting yourself up for a fall.
Purchasing and running a business is a lot of hard work, so being thorough at each step of the way will increase your chances of success.
2. Are you up to the task?
Buying and operating a business is not for the fainthearted. For some the idea of operating their own business spells freedom and more time with the family, and in some cases more money… though this is certainly not true in all cases.
An evaluation of your personal and professional goals and capabilities are the first step to deciding whether or not you’re going to be able to hold up a business on your own.
Certainly tenacity and initiative are vital if you’re going to purchase and run your own business. You have to be prepared to take the victories with the defeats, as the buck now stops with you.
A deciding factor in the success of your business will be the way in which you handle the defeats and feed off the victories, and you have to be ready to put in long hours in order to be able to do this.
3. What type of business will you buy?
You need to consider what type of business it is you want to buy, and why.
Perhaps the business will be involved in a field that you’re interested in or have some prior experience in, however these are not the essential factors in determining what kind of business you take up and run.
While experience and interest in your business’s field will certainly help you in running it, the most important thing one can do is to properly evaluate the appropriate industry. Thorough research will give you a good idea of whether or not you will be capable of successfully running the business, and as such is a vital pre-purchase step to take.
Also, don’t be afraid to ask questions of others from the same industry – they will be able to give you an insight into the industry and any possible pitfalls that you may face.
Stay tuned for the next instalment in the series Part 2: The Business.